Case Study: Boulder, Colorado

For years, politicians, activists, business leaders, and a whole swath of interest groups have called for the government to stimulate the switch to a smart grid system, through regulation, investment, or any means possible. Thus many of these groups were surprised when on January 16, 2008, Xcel Energy of Minneapolis, MN announced that it would pioneer the first “Smart Grid City.” Since then, Xcel and its partners have chosen Boulder, Colorado, a tech-savvy town of about 100,000 nestled in the Rocky Mountains. As this project unfolds, it’s important to acknowledge how different actors are approaching or defining the smart grid, who will benefit and lose from its implementation, and how citizens can be better integrated into the decision-making process.

Xcel Energy back

Xcel Energy is one of the largest utilities in the nation, serving 3.3 million customers over an eight-state region.^[1] The company has quickly become a leader in renewable energy, and it markets itself as an environmental pioneer. Xcel also makes a point of highlighting its involvement in building community through educational programs and grants. It would thus seem tenable that Xcel would begin establishing a smart grid.

Xcel highlights five main reasons for its switch to smart grid technology, including positive environmental impact, enhanced reliability, increased efficiency, reduced consumption, and lowered cost.^[2]  However, for a utility, the greatest benefits are reliability and the ability to charge varied prices. Furthermore, Xcel could also charge different prices for different types of fuel – certain customers could be on a “green” plan (wind, solar), while others could be on an “inexpensive” plan (coal).

Xcel’s deep motivation may also stem from its survival as a utility. With the possibility of a carbon price coming quickly, Xcel is recognizing that it can benefit from efficiency savings and renewables. Rather perceptively, Xcel acknowledges the need for a transition from a produce-based framework of gaining profit from production and sale of energy to a service-model, in which it creates options for its customers while increasing efficiency. This transition is very important, and Xcel should not take these words lightly. However, much of Xcel’s imagery could be greenwashing; while its website is plastered with pictures of children and wind turbines and the company calls the smart grid its “wind-to-light/coal-to-cool air” plan, it fails to adequately quantify how the smart grid will actually reduce carbon emissions or increase the use of renewables. Xcel plans to implement 1,000 distributed generation “technologies” in Boulder,^[3] but does not have any concrete plans to pursue distributed generation after. It is essentially building capacity for distributed generation, but relying on others to buy them.^[4] Unfortunately, Xcel’s messaging when talking of the smart grid often seems to center around the possibilities that entail after smart grid integration rather than the concrete plans and changes.^[5]

At the end of the day, the $100 million investment by Xcel and its partners could spark grid reform across the nation. Xcel has an interest in demonstrating that a smart grid can work, as if its success could spark further investment, even to the point of a massive federal investment.^[6] Therefore, Xcel’s choice of using Boulder as their demonstration heeds further analysis. When outlining their criteria for the Smart Grid City, Xcel specified that the city should be a geographically isolated small- to medium-sized metropolitan area, with environmentally conscious consumers, optimal PR and development opportunities, and policy incentives for change.^[7] The majority of Boulder’s citizens and its government fit snugly within these criteria,^[8] but it’s important to think critically about what kind of community fits Xcel’s qualifications.

Xcel chose Boulder for those reasons, but the city is hardly representative of the US or Xcel’s customer base. Boulder is an affluent and young community, and contains a number of high-tech research institutes and a large research university. Xcel CEO Dick Kelly has repeatedly stated that, “We wanted people that weren't afraid of technology or were excited about technology”^[9] and “We were looking for a place where you've got technologically-oriented people who are more likely to participate.”^[10] The assumptions that Xcel makes reflect its conception of a susceptible community as one that is tied to higher income levels, that is focused on technological solutions to global problems. From Xcel’s logistical perspective, this may be a tactful choice, but it discounts many of those who may benefit from the educational tools that a smart grid brings. Even if Xcel’s program succeeds in Boulder, it may not work within a different demographic.

Boulder’s Government  back

Boulder’s city government has been very proactive in making energy choices. The city has taken the Mayor’s Climate Protection Agreement seriously, developing a comprehensive Climate Action Plan for the city and instituting a number of policies that encourage energy efficiency, renewable energy development, and other sustainable practices, including the nation’s first carbon tax.^[11] Likewise, much of the citizen engagement and action on the project has been or will be initiated by the government, so it’s important to see how Boulder’s government is approaching the smart grid development.

One interesting component of the Climate Action Plan is its development of a community sustainability plan, in order “to become attuned to the opinions and needs of the community, including those who don't typically participate in city government, on a broad range of issues and to help identify the desires for the future "look and feel" of Boulder.”^[12] The community sustainability plan current consists of a number of initiatives, including small meetings (“meetings-in-a-box”) that attempt to develop an inclusive community for all. Adhering to this principle is important, especially in the implementation of new technology.

The city government of Boulder had considered purchasing the electricity distribution rights for its city, since Xcel’s twenty-year contract expires in 2010. The City Council devoted over $250,000 to studies, and the municipalization plan was expected to cost $150-200 million. The municipalization was intended to allow Boulder’s government greater freedom in enacting energy efficiency and renewable energy with greater freedom. However, on March 12, one week before the board was to announce its findings, Xcel announced that it had picked Boulder to be its Smart Grid City. The Boulder city council voted 9-0 to suspend (not abandon) municipalization studies on March 18.^[13]

The government had made an effort to include citizens in the municipalization decision. It created the Municipalization Task Force, a group of twenty-five appointed citizens, to look at municipalization and later, the smart grid. The group was made up of “local business representatives, interested members of the public and experts in the energy field” and had met six times in the last two years.^[14] After the introduction of the smart grid proposal, the task force commented that it was “supportive and excited,” although some worried that the community values of the municipal system might get lost in the transition.^[15]

It’s unknown whether the task force will continue to work on the Smart Grid proposal now that municipalization has been ruled out. However, Boulder’s city government seems to be fairly open to the idea. Kara Mertz, Boulder’s Assistant to the City Manager said that the city would be looking for citizen input on the project, although no timeline has been developed. “There's so much expertise in this community,” said Mertz, “that it would be silly for us not to plug into that resource pool.”^[16] The Boulder City Council has voiced initial support for the Smart Grid, with reservations. In its decision, the City Council cited many of the same reasons as Xcel for the switch. However, the city emphasized even more the smart grid’s potential to facilitate distributed generation and demand-side management, citing energy conservation as the main reason for support of the smart grid.^[17] Boulder City Councilman Ken Wilson, an electrical engineer, called the news “huge.” Other municipal environmental employees commented that the switch could help Boulder meet up to 25% of its emissions reduction goals, as outlined in the Climate Action Plan.^[18]

Consumers and citizens back 

Boulder’s citizens should have plenty of incentive to adopt and utilize the smart grid. The inclusion of supposed benefits like smart meters at no real cost should be appealing to many. The ability of a smart grid to provide different pricing within net metering agreements^[19] makes renewables that perform best during peak hours (ie solar) or battery storage technologies much more lucrative. The smart grid should also facilitate easier connection for those who can afford small-scale renewables.

However, it’s important to take note of which customers would benefit. While the smart meters would presumably be supplied by Xcel (10,000 in Boulder), the rest of the burden lies on the consumer. If the homeowner cannot afford to make efficiency improvements or buy a solar panel, he or she has no choice but to purchase the cheapest energy – coal. This system could then create a divide between the rich and poor, between those who can afford clean energy and those who can’t. The smart meter further relies on education, and those citizens with the free time to go to any education sessions that Xcel might hold will thus benefit most.

            In order to gauge citizen thoughts on the smart grid, I began to look at quotations in news articles and the comments posted on the internet following them.^[20] The actual citizen responses vary, but most were skeptical. Although the $100 million investment would be fronted entirely by Xcel and its partners, some thought that the citizens would pay directly for the smart grid. At $1,000 per person, many users found the cost outrageous. Even after corrected, others complained that the money could be used better elsewhere. “A much greater benefit to the public and the environment,” states one user, “would be if the $100 million was used to construct solar panels on homes and businesses in Boulder” or “simple watt meter[s].”^[21] Others commented that the money could be used for better power lines, buried transmission, or energy efficiency improvements.^[22] . “As a "customer" held captive by a monopoly, Xcel has an obligation to involve us in making decisions to spend $100M of our money,” another noted, “I'm not against new technology, but they need to sell us on its value first.” Even more expressed suspicions at Xcel’s timing of the announcement only a week before Boulder’s city council was to announce its decision on municipalization.^[23] On a whole, relatively few of the Boulder internet commentators were eager to be a prototype for the nation.

            However, at the city council meeting where the grid was discussed, opinions varied. Of nine public comments, only one was overly hostile to the smart grid, citing the same argument about a $1,000 per person cost.^[24] Four of the nine comments were generally positive, including one comment from an employee of the Rocky Mountain Institute, a well-known energy think tank that has an office in Boulder. Another four respondents were skeptical but not hostile – and I think maybe this attitude may be more prevalent. After spending years looking at municipalization, Boulder’s government was about to accept the smart grid after only preliminary promises from Xcel. It had not donated the time, effort, ,or resources that many citizens felt necessary. “What a grid can do and what Xcel will do,” commented Steve Pomerance, “could be vastly different” [emphasis added].^[25]

            At this point in the process, Xcel has begun to hold public meetings, with the first on April 24 addressing a number of business community leaders and another scheduled for May 15th with Boulder's Mayor and Colorado's Governor. While it has been difficult for me to find if or when more of these public meetings will be he (Xcel has not responded to emails), any interested citizens should keep their eyes out for the upcoming meetings and ensure that Xcel is not simply pandering.